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Despite past financial failings, I’ve always had at least one good habit: I save every receipt, bill, statement, invoice, and memo that I receive.
For nearly fifteen years I’ve used the same low-tech system. At the end of the week, when I do my finances, I tuck my paperwork into a shoebox. When the shoebox is full, I place it in storage and start a new one.
I now believe this system is flawed. I’d like to move toward paperless personal finance, and thus would like to purge all this old stuff, keeping only the items I still need.
Tonight I gathered together every shoebox I could find. I had eleven of them. I dumped all of the papers into a single large box, and am now ready to begin sorting. My shredder is lubricated and ready to go. My scanner is eager to digitize important documents. Let the fun begin!
I promise to share any egregious examples of financial folly.
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September 5th, 2007 at 7:58 pm
September 5th, 2007 at 8:08 pm
[...] 5) Insistence. An insistence brand is even stronger. I associate you with a particular attribute and I cannot imagine anyone else working on a project (for example) than you. If I am going to work with someone on my personal finances, I instist on working with J.D. [...]
September 5th, 2007 at 8:17 pm
I scan all my bills as I write the payment checks. I save them as PDFs and they hardly take any space on disk. Then I shred the originals. Having instant computer access to billing records has saved me from endless hassles. It literally saved me $10,000 once.
September 5th, 2007 at 8:22 pm
I would love to have that discipline! I have 2 file cabinets worth of old paperwork. I keep telling myself that I’ll scan everything one day… Oh well…
September 5th, 2007 at 9:43 pm
What amazes me is that I can vividly recall nearly every single transaction for which I have a receipt. And yet I can’t remember to put my dishes in the dishwasher…
September 5th, 2007 at 10:31 pm
WearyTraveler: There’s no need to scan everything. Do what J.D. is doing and shred anything that is no longer relevant, and only scan whatever’s left.
Since I switched to e-billing, I’ve cut down on the incoming paperwork dramatically. The few bills and statements that still come on paper are filed away, but I maintain a fairly regular shredding schedule to keep things from building up too much.
September 6th, 2007 at 2:16 am
Hello. I recently posted how to streamline paper records (click name link if interested) but I agree that it is good to keep a few souvenirs of past mistakes.
September 6th, 2007 at 3:06 am
I also had every scrap of financial information dating back to the beginning of my financial history. I went completely digital in 2001, and it has saved me several times.
My initial scanning phase took almost a month. I quickly got a scanner with a document feeder, although I still had to use the flatbed portion for the receipts. I have several times over been compensated for the time I spend scanning documents. (I once received a $250 credit for a bill over five years old.)
Good luck!
September 6th, 2007 at 4:04 am
Wow, J.D. This is a very ambitious undertaking. Good luck on it, and I hope your new process works out for you!
September 6th, 2007 at 5:04 am
I think I should get a shredder. I just throw it out with the rubbish at the moment (I tend to keep financial papers).
September 6th, 2007 at 5:49 am
I go through my files and shred documents every month or two. I only keep receipts that I might actually need (such as for a return or warranty service).
Purging is good - I love to shred.
September 6th, 2007 at 6:09 am
I’ve been thinking about doing this very thing. How do you decide what to scan and what you can just shred without scanning first?
September 6th, 2007 at 6:18 am
Plonkee: DEFINITELY get a shredder. There’s far too much personal information on most papers to just leave it for anybody to grab from your trash. Cross-cut is nice, but not absolutely essential unless you anticipate people going through your garbage.
My rule of thumb is that anything that has my name or address on it (even if it’s addressed to “occupant”) gets shredded and put in the recycling.
September 6th, 2007 at 7:03 am
If you’re on a mac, Yep is a great piece of software to use for managing documents. It even has scan functionality. You can grab it here: http://thekip.com/
I actually plan to do just what you’re in the process of doing, take all my paper receipts, etc. and scan them in for digital archiving and retrieval.
September 6th, 2007 at 7:14 am
I’m fortunate enough to work at an accounting firm with Shred-It bins located throughout the floor in the building I work in - every so often I will bring in a stack of financial statements I’ve long since scanned or no longer need and will toss it in one of the bins to be destroyed. The firm also has a pretty nice all-in-one copier that was recently installed, so it’s been a gradual process getting older documents scanned, converted to PDF, and emailed to me, but it simplifies the process to no end and saves me the hassle of having to do everything manually at home!
September 6th, 2007 at 8:02 am
WearyTraveler, another idea is to just start where you are. Ignore your artifacts and just start a new system now. Or at your next paycheck, or some other good time.
Plonkee, even if you don’t want a shredder, you can still do some easy things. For example, tear off account numbers, and tear those small bits into little pieces. Then either put some pieces in one trash can and some in another, or put them into a really disgusting part of the trash can, like right where you dumped your no longer identifiable leftovers from the fridge.
September 6th, 2007 at 8:33 am
I signed up at shoeboxed.com, scanned my receipts, and uploaded those receipt images to the website. I think I may actually keep on doing that because it’s easy to look up a receipt when it’s up online.
September 6th, 2007 at 8:37 am
I’m on a Mac, and I’m wondering what other Mac users do to organize this sort of thing. “Yep” doesn’t look like it would work for me (I find tags/tagging to be useless), so what other ideas are there?
And what do you maintain electronically? I’m not so much wanting to get completely into the paperless thing, but I do need a way to manage the documents that I receive only electronically. In the past, I have been printing them out, but I need a way to manage the electronic versions of the documents.
So far what I have been doing is maintaining a directory structure, but there has to be a better way. This way seems to be so “Windows,” and I would prefer a “Mac” way of doing it.
Thanks.
September 6th, 2007 at 8:42 am
JD says, “I now believe this system is flawed.”
Why? You don’t explain.
I enter my receipts in Quicken (tracking all my spending) and then stick them in envelopes or shoeboxes in storage in case the IRS needs the originals someday. It’s a lot less work than scanning stuff that may never be looked at again. But maybe I’m missing something?
September 6th, 2007 at 10:32 am
I’ve gone almost entirely to paperless billing, and a couple months back I purged and burned all my non-relevant receipts (shredding was too much work) but I don’t think I want to scan what’s left. I just don’t see the payoff. Out of about a garbage bag worth of receipts the ones I kept barely take up a small Future Shop bag. Scanning everything would add serious overhead both to storage and retrieval, and save a negligible amount of space.
September 6th, 2007 at 11:25 am
Help I’m like JD, I have stuff from 1990. I’ve saved bank statements & checkbooks that have since been closed. I’m always afraid something will come back to haunt me after I’ve tossed/shredded it away.
I like the idea of going paperless & scanning important receipts. But then need help keeping them organized in files for the computer (any tips).
September 6th, 2007 at 1:21 pm
My mom was the same way. When she died I found a checkbook from 1967. Very cool to see the prices and purchases from that time period.
September 6th, 2007 at 4:43 pm
JD,
It is so worth scanning, steamlining your financial life.I commend you. I made the jump in 2005 and haven’t regreted it. It took two months. I scan everthing onto a jumpdrive with detailed label folders and subfolders. I make copies occasionally on CD for back-up. But if my house was to be wash away tommorrow my financial life would not go with it.
September 6th, 2007 at 8:14 pm
Why? You don’t explain.
Ah, yes. I glossed over that, didn’t I?
The system is flawed because it’s virtually impossible to find any document that I might actually need. I had eleven different shoeboxes. Yes, they’re organized with roughly a year of stuff in each, but still I’d have to sort through a mass of papers to find any one thing.
Also, I store all these documents in an easy-to-access place, making them an easy target for identity thieves. (Though I’ll admit, they’d have to be pretty desperate to be looking in shoeboxes!)
Plus, I *burned* records from one box at one point, so I’m missing data from 1998-2001 (or something like that). That’s a shame since late 1998 was when I made one important financial move. I’m hoping to find my old Quicken data so that I can reconstruct it, but I fear it may be lost…
You’re right that sticking things in a shoebox is less work to do on a regular basis, but if you ever need to look anything up, that time savings is right out the window. And I think that an ongoing system of scanning doesn’t add much time to the process. I’m hoping so, anyhow!
September 7th, 2007 at 11:28 am
I’d be interested to know how you’re labeling and archiving these scans so that they’re easily findable in the future. How are you ensuring that they will be openable in 9 years (to avoid the current problem you have with your Quicken data)? If PDFs (or whatever format you’re using to save scans) get reinvented in 5 years, must we then open and re-save all of our old data in the new format, and back it up again?
September 7th, 2007 at 11:49 am
PDF files are pretty much rock-solid when it comes to future-proofing. PDF files created several years ago are still accessible using current versions of Adobe’s reader or an alternate PDF reader.
September 8th, 2007 at 12:55 am
Why waste money on a shredder, when it is so much fun to burn old bills?
Also keep in mind, that some documents only hold in front of a court, if you keep the originals. Tampering with scanned documents is so easy.
September 10th, 2007 at 1:43 am
[...] have a new goal this week. Thanks to this post and following comment discussion at Get Rich Slowly, I’ve decided to take the plunge into [...]
September 10th, 2007 at 2:35 pm
I’m on a mac too. I use KIT (Keep It Together), I like it better than YEP. And I use a Fujitsu ScanSnap, which is all it’s cracked up to be. It’s indispensable to me now. Scanning any other way is too painful now.
September 11th, 2007 at 4:30 pm
I’ve been scanning and shredding for some years now. I have an ancient HP scanner that has been lurking around for 10 years and it continues to digitize my paperwork on an almost daily basis.
My pattern is: I scan something, and put in a directory tree split by year then month. If I need to search for a particular bill or set of bills, I have several search options.
For backup, I make a compressed encrypted file of each years directory and upload that to on-line storage.
Some critical papers get filed, but have been scanned for backup anyway. Everything else gets shredded in an old cross-cut shredder that I bought from a liquidator. I’ve had the shredder for 8 years. It doesn’t so much cut as tear into ragged rectangular pieces a quarter-inch long. It’s done that from the day I got it.
Plain clutter in the form of non-financially-sensitive ads get chucked in the recycle bin.
I can go back to 1998 if I need to track something down.
September 11th, 2007 at 4:57 pm
All this seems like *way* too much work. When I do my taxes every year, I consolidate the years bills & receipts. (During the year, these are organized via envelope into a shoe box.) They fit nicely into one business sided manila envelopment. These are put into a book box where I store 10 yrs worth of tax records. As I add one file each year, the oldest year gets discarded.
The only other things I keep are permanent contracts, such as insurance, mortgage, auto contracts & any amendments made to them over the years. Bills with notations about check numbers are kept w/the contracts for 5 years or whenever the files get too thick.
October 17th, 2007 at 10:59 am
[...] show you an actual spending plan I drew up three years ago. (This document is an important piece of financial archaeology. It’s the first spending plan I ever made, and it’s the first sign that I was ready to [...]
October 17th, 2007 at 12:25 pm
I’m with the commenter above who asked, “How do you know what to keep and what to get rid of?” I’m young yet, so I don’t have any experience to fall back on.
Help!
October 17th, 2007 at 2:04 pm
Allen: Short term, keep everything and keep it organized. After a few years, you’ll figure out the kinds of things that you’ll need to refer to, and the kinds of things you want to purge.
As a rule, anything dealing with taxes needs to be kept for at least 7 years.
October 17th, 2007 at 4:29 pm
I have to admit, i was hoping for a differnt answer then, “You have to have it take up as much space as possible.”
Thanks for the reply, though. My place is very space-light, so any upfront suggestions would be welcome.
JD: the model you linked to to amazon is no longer being sold, any word on the newer models?
October 17th, 2007 at 4:53 pm
Allen: Space shouldn’t be too much of an issue. I have all of my papers in a single drawer of a small filing filing cabinet. Having a good filing system helps minimize space usage.
October 18th, 2007 at 1:11 pm
I love your emails. I trash almost all the other emails from causes I care deeply about, because I don’t have time (or money, right now). Yours I save and manage to read most of them. I forward to my kids, and I forward to a friend working on her Master’s in Sustainable Communities.
That’s what I love about Get Rich Slowly — the sustainability factor.
And yet I do things you might consider financially irresponsible. For example, last week I borrowed $19,900 at 0% interest till March, $50 fee. I used it to pay back $8,000 taken out of my retirement fund to do construction. Paying back the retirement fund saved me $2,000 in 2006 taxes that I paid on Oct 15 (extension). I paid $12,000 into my SEP (pension plan with deferred taxes), saving $3,000 in 2007 taxes.
$5,000 taxes saved, for a $50 fee.
I will receive enough fees during the first quarter of 2007, to cover the card.